China Jo-Jo Announces Healthcare Reforms Designed To Concolidate, Modernize, And Accelerate China's Chain Pharmacy

China Jo-Jo Drugstores, Inc. (NASDAQ CM: CJJD) (the "Company" or "China Jo-Jo"), a leading China-based pharmacy with retail, wholesale and online distributor of pharmaceutical and health care products through its own online and retail pharmacies, announced healthcare reforms intended to consolidate, modernize and accelerate chain pharmacy growth in China. A mandate of China's health insurance program requires pharmacies to have government reimbursement licensure in order to process authorized prescription reimbursements. This component of China's health insurance program has become a critical and growing revenue source for established pharmacies, especially in cities. In the 3rd calendar quarter of 2015, the Chinese Government decided to accelerate growth in domestic chain pharmacies for those participants who have historically demonstrated adherence to high standards of excellence. As such, rules governing the inspection and qualifications process of newly acquired chain drugstore locations were rescinded. The rationale was that the inspection process formerly placed undue burden on chain drugstores in order to requalify newly acquired storefronts for pharmacy certification. The former recertification process would shutter a newly acquired but operational pharmacy for more than a year, depending on the store location, while waiting for new licensure. A new proposal has been approved intended to reward large chain drugstore operators who can standardize and accelerate the development of the pharmacy market in China into a mature model that is best able to service the growing demands of consumers both in retail stores and online storefront formats. The new mode of doing business starting in 2016 is expected to promote industry consolidation meant to inhibit unauthorized sale and production of counterfeit or mislabeled products while promoting and accelerating chain pharmacy growth for those businesses who can adhere to strict quality standards. The new model allows for chain drugstores to enter into contractual agreements with the State Council, allowing for quicker startup times of newly acquired storefronts. In exchange for this accelerated process, chain drugstores will have to transform the operations of new storefronts into modern, standardized operations promising to adhere to the highest standards of safety and regulatory oversight subject to periodic inspections by the PRC. Mr. Liu Lei, CEO of China Jo-Jo commented, "China Jo-Jo is in full support of these healthcare reforms in China as it allows for chain drugstores such as ours to have an immediate return on invested capital. With a dual prong approach; selling pharmaceutical and healthcare products both online and in retail storefronts, we believe the new legislation will allow China Jo-Jo to become an industry consolidator in-line with strong secular trends and government policy promoting growth in our industry."